Up until about five years ago, Katie Haun’s career path wouldn’t have led you to believe she’d end up becoming one of the most prominent investors in the cryptocurrency industry.
After clerking for US Supreme Court Justice Anthony Kennedy in the early 2000s, Haun worked as a federal prosecutor for more than a decade. It was Haun’s investigations into white-collar crimes that eventually prompted her to dive deep into Bitcoin-related crimes—turns out, there are some nefarious use cases for emerging technologies. But when Haun left the federal government and joined the famed venture capital firm Andreessen Horowitz, a connection that was made through her board appointment at Coinbase, her conversion to crypto champion was complete.
Now Haun is branching out and launching her own fund, named Haun Ventures. It’s a big one: Haun and a team of eight others (so far) have raised $1.5 billion, making it one of the largest debut venture funds raised by a woman. Haun Ventures is focusing on Web3 companies, which will be underpinned by, of course, crypto. A third of the fund raised will go toward early-stage companies, and the remaining $1 billion will be part of an acceleration fund.
Haun’s fund, like the broader Web3 world, is an amalgamation of players, with recognizable names alongside unlikely ones. The investment team and board of advisors comprises executives from A16Z, Coinbase, Airbnb, Shopify, and Jigsaw; actor and writer Mindy Kaling has joined as an advisor; and Haun has confirmed investments in Autograph, OpenSea, Aptos, and Moonwell.
If you’re not yet sure what those companies do, you’re not alone. Web3 is currently the catch-all term for what many technologists see as the next big phase of the internet. One of the promises of this next iteration of the web is that it will be “decentralized,” shifting power away from the Big Tech firms of the past 20 years and back into the hands of the inventors and creators who want to build a better web. But how decentralized will this next web be if all of the same power players are involved? And what makes Haun Ventures different from other large crypto funds?
This conversation has been edited for clarity and length.
WIRED: So, you’re formally announcing Haun Ventures. What is the biggest differentiator between what you plan to do at Haun Ventures versus what you did at A16Z (Andreessen Horowitz), especially considering that you still have such a close working relationship with A16Z—they’re funding you, and there’s actually overlap in some of your investments?
Katie Haun: Yeah, that's such a great question. Look, I think there will be some similarities and there will be some differences. I think Marc [Andreessen] and Ben [Horowitz] pioneered this “founders first” culture that we very much hope to live up to and emulate. And that's especially important in crypto and Web3. Because, to be candid, a lot of founders who are building right now in that space, who are building some of the most exciting products and services, don't actually need capital. They have their choice of capital, really. And so the importance of the founders-first culture that Marc and Ben really pioneered is important.
On the other hand, obviously we're very different. We're much smaller. So our scale is also small. A16Z built this team of networked services—they service fintech companies, enterprise, consumer, crypto. I was part of that, but we’re not going to offer a whole suite or network of services. We do have some exceptionally skilled operators, and we’re going to look to deliver those “hero moments” where we can really uniquely add value to the projects we invest in.
Your fund has been described as a truly “crypto-native” fund, whereas at other firms, like A16Z, there might be a second fund or even a third fund devoted to crypto investments, but that’s not the main purpose of the firm. How concerned are you about any kind of lack of diversification? Like if crypto crashes, or if Web3 becomes a series of functions or features built on top of a preexisting web, as opposed to leading to the formation of entire companies—
You’re asking about our decision to myopically focus on or go all in on crypto and Web3, as opposed to having different verticals and options. I’ve spent almost a decade in this space, and I certainly see this as the future. So I’m not worried about the opportunity set. And I'm also not worried about diversification because of how dramatically the space and the ecosystem have grown. Let me tell you a little bit about what I mean by that.
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In the early days of the internet, you wouldn’t have just said, “I’m going to make a social media investment or a cloud investment.” You would have had your developer tools play, your cloud play, your social media play. Similarly, here it’s an ecosystem. We plan to invest in the three layers of the stack. Layer one is Web3 protocols. Layer two is around interoperability, scalability. And then layer three is the application layer, kind of the consumer-facing layer. And crypto-adjacent is very much in our thesis. We think things like identity, like security, like insurance will become very important categories.
I think our decision to hold tokens and also to hold equity is itself diversification within this ecosystem. You know, there are a lot of funds out there that are doing crypto investments, but they are not participating in the token ecosystem. We will be long-term holders of tokens.
For people who are not so deeply steeped in the world of Web3 and crypto and NFTs, what does it mean that your firm is going to hold tokens?
When I say hold, I mean as opposed to being traders, because you do have crypto hedge funds that are trading in and out positions of tokens. Obviously, there can be fluctuation in price. And we don't plan to do that. We plan to take long-term positions. Because we’re a venture capital firm, we make what I used to say were 7- to 10-year bets. I think the way crypto moves so quickly, maybe that's more like 5-7 years now.
But it's still long-term focused. People sometimes ask me, “Well, couldn't I just go buy tokens myself?” Whether that's Ethereum, whether that's Solana … I’m talking about making investments in ecosystems. It's not enough anymore to just show up and make an investment. You've got to actively participate in the governance of these protocols.
The other thing that I think isn’t widely appreciated about tokens is that a lot of them start out as not subject to dilution. Whereas with equity investments, you get diluted between a seed round or series A round or an exit. So just in terms of your question about owning tokens, we just think that tokens are really a new business model of the Web3 ecosystem.
So you mentioned earlier that part of your positioning as a true, crypto-native fund is that you want to appeal to entrepreneurs because some entrepreneurs have their choice of VCs they can go to. The capital is flowing. But why would Web3 entrepreneurs actually need VCs?
And if Web3 is all about the power of the masses, and decentralization, I’m wondering how real that proposition is, given that the space is already centralized around a small number of power players and gatekeepers.
I think decentralization and centralization exist on a spectrum. Like I said, a lot of these founders don't need venture capital investors. They can go to different funding sources, and frankly, a lot of them could self-fund for some period of time.
But a founder recently said to me, “We're not talking to venture capital firms for this round,” and I said, “Well, why are you talking to us?” And his comment was, “Because you're not a venture capital firm. You're a venture contributor.”
What does that mean?
That means that we're doing more than just bringing capital. If you think of the first era of venture, it was just capital. And by the way, there are still some venture capitalists where the model is just to give capital. Then there's a second era of venture capital investing, and it was capital plus services. What we're doing is we're going a step further and we’re contributing to the project.
We also look to drive system change, which is more than just bridge-building between projects in the Web3 ecosystem and regulators and policymakers. It's also folks in the media industry, it’s folks in academia, it’s researchers … We've seen Instagram, Twitter, and Facebook all start talking about what they're going to do in the Web3 and crypto space. So I think building bridges between those communities and driving system change is one way in which we expect to be venture contributors.
It just seems there are at least two disparate conversations about Web3 that are happening right now. And one is about entrepreneurs building this new version of the web from the ground up, they’re bootstrapping new applications and ideas for the web … and then it feels like there's this land grab or power grab that's happening on the money side, where the same players as before are saying, How can we get in early? How can we get our returns?
Well, we’re not looking for quick returns. We are looking for returns for our LPs [limited partners], however. We’re looking for that very much over the long term.
I think in terms of your question about centralization and decentralization, there's a lot of black and white in this ecosystem. There's a lot of noise. Obviously, the internet of value is prone to hype sometimes. I think that one thing I try to do is I try to be nuanced. And this exists on a spectrum.
One thing that our team sees is that right now the current paradigm is really weighted too heavily toward these walled gardens that are really extracting a lot of value and not giving back a ton of value. And I won't name names of those walled gardens, but I think that crypto technologies will increasingly put pressure on these big tech platforms. And I think that over the long term, that’s really good for consumers and that's really good for creators.
In a recent Fortune article written about you, Amy Wu [who leads FTX’s $2 billion crypto fund] was quoted as saying, “Regulatory compliance is the most important topic in crypto this year.” What are your thoughts on that? And if you agree, what does the regulatory environment actually look like for cryptocurrency this year?
I don’t want to slap a label on it and say it’s the most important issue because there are a lot of pressing issues, but I think it is one of the most important and will continue to be long beyond this year. Regulation and policy, at a global scale, are going to be topics we’re talking about far beyond 2022 and far beyond 2023.
What does the regulatory picture look like? That’s a really complicated question. We see that it’s shifting. One thing we’re very encouraged by is the executive order that came out of the Biden administration a couple weeks ago, for two reasons—one, it directs every agency in the federal government to come up with a strategy for crypto and Web3. I think that's a reflection of what I said earlier, that this landscape is about much more than just financial products and services, and the EO is a recognition of that. It's also recognition that crypto and Web3 aren't going anywhere.
The second reason we were encouraged by the executive order is because it also directs those agencies to engage with industry and academics and people outside the government. When I was working in government in the early days, working alongside these technologies, one of the hard things was for someone in the government to keep up with, like, “Where is the training? What are the resources? How do you learn about these technologies?” So, I think bringing in the private sector, bringing in academia, bringing in nonprofits and a variety of different voices is really important.
I also think if you zoom out, one of the things we see in the regulatory picture is the creation of certain crypto hubs and Web3 hubs. There are different jurisdictions that are really jockeying for position to be a bastion of regulatory clarity and a welcome zone for crypto and Web3 developers and projects.
It’s kind of similar to—you know how a lot of corporations are headquartered in Delaware? I think a lot of hubs throughout the world want to be Delaware for crypto. Delaware became a hub for corporations, at least in this country, because their courts developed a subject matter expertise and they had a favorable regulatory environment in that state. And we see a similar thing happening on a global scale with different hubs emerging that are really trying to attract the best talent.
But I think the key thing is we'll still be talking about a need for regulatory clarity in the year to come.
As someone who worked as a prosecutor and who now is such a champion of crypto, you kind of speak both languages. I’m wondering if you ever see yourself going back to the public sector.
I have no plans to go back to the public sector. I will say that I really believe that there's a lot of societal benefit that can come about from Web3 and crypto, and I'm feeling right now like my highest and best use is working with the founders and builders ushering in what I think is a positive societal change.
That's why I was a prosecutor for as long as I was. I wanted to have meaningful work and feel like I was making a positive contribution. And I feel like my highest and best use right now is in the crypto ecosystem. There’s a need for a lot of bridges to be built between different worlds.
There are a lot of myths that I still encounter in crypto. The fact of the matter is that crypto and Web3 still feel very inaccessible to very many people in the world, no matter your background, no matter your education level, no matter where you come from. And I want to spend my time showing people that anyone can learn about crypto.
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